Wednesday, November 27, 2013
Mass harm exerts enormous pressure on civil justice systems to provide efficient but fair procedures for redress. In this context, settlement of mass disputes is easily understood as a common good. Yet settlements involving hundreds or thousands of claims, often across jurisdictions, raise concerns about the substantive fairness of the compromise reached by lawyers, and the ability of the court system to ensure meaningful oversight. Unburdening the judicial system from mass claims comes at a price; how much rough justice are we prepared to accept?
The difficulty of balancing these competing interests is ubiquitous. Canadian class action settlement practice is no exception. In this book chapter, I first explore the realities of this form of litigation, and to some extent debunk the myth that class actions inevitably result in large monetary settlements. I then turn to a brief discussion of the incentives and disincentives to settle large claims, for both plaintiffs’ lawyers and defendants. In Part III, I describe and critique the judicial framework for the approval of proposed settlements. I finish by pointing out the lack of alternatives to class proceedings and conclude that, though not perfect, the Canadian class action settlement system stands as a model for consideration by other jurisdictions wrestling with the problem of mass disputes.
The chapter is part of the forthcoming book, Resolving Mass Disputes: ADR and Settlement of Mass Claims (Edward Elgar 2013), edited by Christopher Hodges and Astrid Stadler.
Thursday, November 7, 2013
Yesterday, the Supreme Court heard oral arguments on whether parens patriae actions brought by state attorneys general are removable as mass actions under the Class Action Fairness Act. (Mississippi ex rel. Hood v. AU Optronics Corp., U.S., No. 12-1036) The lower courts have split on the issue, with the Fifth Circuit holding that such actions are removable when the citizens are the "real parties in interest," and the Fourth, Seventh, and Ninth Circuits reaching the opposite conclusion. The Fifth Circuit, in Louisiana ex rel. Caldwell v. Allstate Insurance Co., held that because the attorney general sought damages on behalf of insurance policy holders, the policy holders were the real parties in interest to that relief. But other courts, even within the Fifth Circuit, have distinguished that reasoning. Judge Fallon, for example, in some of the Vioxx cases, held that the Kentucky attorney general's action against Merck was not removable as a class action. He distinguished Caldwell, reasoning that it was decided under CAFA's mass action provision and the citizens of Kentucky were not the real parties in interest. Instead, the Kentucky attorney general was requesting injunctive relief and civil penalties, not damages as was the case in Caldwell.
The issue is an important one as the standard for certifying a class action has become more rigorous. Many commentators have argued that state attorneys general should step into the breach to provide relief and deterrence when actions aren't certifiable as class actions. Yet, questions remain about this approach. Specifically, most parens patriae statutes do not contain the same protections as Rule 23 does with regard to adequate representation. Plus, courts are often unsure how to evaluate issue or claim preclusion when a private citizen sues in the wake of a parens patriae action.
For the interested reader, yesterday's BNA Class Action Litigation Report had an article by Jessie Kokrda Kamens about the oral argument. Her take was that even though some justices questioned state attorneys generals' motives in bringing parens patriae actions, they weren't ready to declare them removable under CAFA.
Friday, October 11, 2013
Defendants in the moldy washers cases have filed cert petitions once again after the 6th and 7th Circuits reinstated those liability only (or issue) class actions. You can find the briefs here and here.
It doesn't make sense for the Supreme Court to grant cert, but stranger things have happened.
Why don't I think the Court should grant cert? Commonality is clear, there aren't real damages issues because its an issue class action and the circuits are coming together on the question of issue class actions and their parameters (coalescing around the ALI proposals and the Manual on Complex Litigation) and these are squarely in the field where class actions are most useful - consumer claims. In other words, there's nothing adventuresome here for the Court to consider.
For more defense side links with a different point of view see the Volokh Conspiracy.
Wednesday, October 2, 2013
In the human rights litigation over Argentina's "dirty war" of the 1970s and 1980s, a dispute over personal jurisdiction has reached the Supreme Court and will be argued on October 15 (DaimlerChysler AG v. Bauman). A group of Argentinian plaintiffs sued DaimlerChrysler AG, alleging that the company's Argentinian subsidiary participated in kidnappings and other serious wrongdoing. They sued in the Northern District of California. On the question of personal jurisdiction, the Ninth Circuit held that DaimlerChrysler was subject to general jurisdiction in California based on the contacts of its US subsidiary, Mercedes Benz USA. The Supreme Court granted certiorari to resolve the jurisdictional question.
The Vanderbilt Law Review has published an online roundtable concerning the case, and the initial papers -- by Donald Childress, Burt Neuborne, Suzanna Sherry, Linda Silberman, and myself -- are now available on the Vanderbilt Law Review En Banc website. My own contribution, entitled The Home-State Test for General Personal Jurisdiction, takes a strong view that the Ninth Circuit got it wrong. General jurisdiction over corporations requires a home-state relationship; it should not be founded merely on the contacts of a subsidiary acting as an agent, or on the fact that a company has a substantial presence or does substantial business in the forum state (even if that business is "continuous and systematic," to use the ambiguous and misleading language that the Supreme Court should finally abandon as a description of the sort of relationship that justifies general jurisdiction).
Thursday, September 5, 2013
No procedural topic has garnered more attention in the past fifty years than the class action and aggregation of plaintiffs. Yet, almost nothing has been written about aggregating defendants. This topic is of increasing importance. Recent efforts by patent “trolls” and BitTorrent copyright plaintiffs to aggregate unrelated defendants for similar but independent acts of infringement have provoked strong opposition from defendants, courts, and even Congress. The visceral resistance to defendant aggregation is puzzling. The aggregation of similarly-situated plaintiffs is seen as creating benefits for both plaintiffs and the judicial system. The benefits that justify plaintiff aggregation also seem to exist for defendant aggregation — avoiding duplicative litigation, making feasible negative-value claims/defenses, and allowing the aggregated parties to mimic the non-aggregated party’s inherent ability to spread costs. If so, why is there such resistance to defendant aggregation?
Perhaps, contrary to theoretical predictions, defendant aggregation is against defendants’ self-interest. This may be true in certain types of cases, particularly where the plaintiff’s claims would not be viable individually, but does not apply to other types of cases, particularly where the defendants’ defenses would not be viable individually. These latter cases are explained, if at all, based on cognitive limitations. In any event, defendant self-interest does not justify systemic resistance to defendant aggregation. Likewise, systemic resistance is not warranted because of concerns of weak claims or unsympathetic plaintiffs, the self-interest of individual judges handling aggregated cases, or capture by defendant interests. This Article proposes that to obtain the systemic benefits of defendant aggregation and overcome the obstacles created by defendant and judicial self-interest, cognitive limitations, and capture, defendant aggregation procedures should use non-representative actions, provide centralized neutral control over aggregation, and limit aggregation to common issues. This Article concludes with a modified procedure to implement these principles: inter-district related case coordination.
Tuesday, September 3, 2013
Professor Jill Wieber Lens (Baylor) has posted to SSRN her article, No Matter the Enormous Cost: A Defendant's Accuracy-Based Right to Present Defenses. Here's the abstract:
The Supreme Court has held that a plaintiff has a due process right to her day in court. The right is grounded in a process-based theory of procedural due process, which values litigant participation intrinsically. The defendants in Philip Morris USA v. Williams and Wal-Mart Stores, Inc. v. Dukes claimed something similar — a right to present defenses. The Court recognized that right in both cases, stating that a defendant could not be punished for harming nonparties or be forced to pay damages to a class action plaintiff without being provided the opportunity to present defenses specific to the nonparties and absent plaintiffs.
The cases are significant not because the Court found the right, but how it did so — relying on an outcome-based theory of procedural due process, under which procedures are necessary to achieve accurate results. The pursuit of accuracy is alarmingly uncompromising. Only the accuracy resulting from individualized proceedings was acceptable. And the Court required individualized proceedings despite the costs — unpunished defendants, with little incentive to alter their behavior, and uncompensated, injured plaintiffs. But the Court did not weigh the costs and instead focused on increasing accuracy even though perfect accuracy can never be achieved. The cases pave the way for an absurdly broad, outcome-based right to day in court for defendants.
Monday, August 19, 2013
Am Law Litigation Daily has an article on the tobacco companies' filing another certiorari petition in an Engle progeny case: Tobacco Companies Seek Supreme Court Cert in Engle Case, by Ross Todd. Here's their petition for a writ of certiorari. The appellate team includes Greg Katsas (Jones Day), Paul Clement (Bancroft), and Miguel Estrada (Gibson Dunn).
I've previously addressed issue preclusion, verdict variability, and problems with the Engle case in my article, Jackpot Justice: Verdict Variability and the Mass Tort Class Action, 80 Temp. L. Rev. 1013 (2007).
Tuesday, August 13, 2013
Adap Liptak of the NYTimes has a piece When Lawyers Cut Their Clients Out of the Deal about a cy pres settlement with Facebook. In this settlement (approved by the 9th Circuit) the lawyers got $2.3 million and the clients got a cy pres contribution, apparently $6.5 million to a foundation over which Facebook has some control according to the article. The cy pres recipient is something called the Digital Trust Foundation. A quick google search came up with a bunch of references to the Facebook settlement but no website for this foundation.
The Ninth Circuit affirmed the settlement and denied rehearing en banc, with a dissent on rehearing en banc, making this a possible Supeme Court cert grant. (A cert petition was filed on June 26, 2013).
There is a lot of scholarship on the topic of how much lawyers should be paid relative to class members as well as articles critizing cy pres settlements. Some links to this work are below. The problem is this. We regulate entities like Facebook largely by litigation. In the absence of the class action, there would be little or no enforcement of the consumer protection laws. But the class action litigation needs to be funded, and it is funded out of lawyers percentage of the total fund, usually the total fund from a settlement because class actions are almost never litigated. Its very hard to certify a class action, so class actions are often certified for settlement only. The incentive of the lawyers, fearing no class certification or realistic possibility of actually litigating, is to settle. The incentives for defendants, wanting to get the litigation off their books, is to settle cheap. The answer to this problem in my view is to allow classes to be litigated, not to tighten the certification standards further.
If the settlement will deter future misconduct, even if the money doesn't go directly to the class members, there is still a lot of societal value there. But is $8.8 million enough to deter Facebook? Does it have any relationship to the potential value of this lawsuit? That is, what is the value of the claims multiplied by the probability of success?
In my own work, I've suggested that cy pres settlements are not necessarily bad, but that certainly doesn't mean they are always good. Class members should just be polled in determining where cy pres settlements should go. The argument that class members will not appreciate the putative $1 (I think I saw it was $1.12) they would get in a settlement like this one is reasonable. But that doesn't make a settlement like this one okay. Especially in a settlement involving facebook users, who presumably are all connected via facebook, there is no reason why absent class members cannot be polled. Do they "like" this foundation? what would they prefer? Might I suggest Public Citizen as a recipient?
This case might be a fine vehicle for the Supreme Court to consider cy pres settlements. Given how few cases the Court decides, how few class actions actually are filed and litigated (less than 1% of the federal docket) its not clear to me that this is the best use of its time. That said, if the Court does grant cert, it would be wise to consider both the overall benefits and costs of cy pres to consumers and society more generally, not merely the fact that the lawyers got a lot of money here. This is a story of more money than sense.
Monday, July 22, 2013
The presentatons from the 2012 Moscow meeting of the International Association of Procedural Law have been posted to SSRN as a combined UC Irvine Law research paper entitled, Civil Procedure in Cross-Cultural Dialogue: Eurasia Context. Among the many professors whose papers are gathered are Carrie Menkel-Meadow (UC Irvine), Richard Marcus (UC Hastings), Stefaan Voet (Univ. of Ghent), and Jasminka Kalajdzic (Univ. of WIndsor). Here's the abstract:
The Idea of the book is to discuss the evolution of civil procedure in different societies, not only in the well-known civil or common law systems, but also in different countries of Eurasia, Asia, etc. Civil procedure in Europe and North America is a subject of enormous scientific and practical importance. We know a lot about these systems. But we do not know enough about civil procedure in the rest of the world. How does it work and what are the main principles? Culture is one of the main factors that makes civil procedure of these countries different. Therefore it is necessary to discuss the main links between different systems of civil procedure. The discussion was held on the basis of National reports from 24 countries.
Sunday, July 21, 2013
Khoury, Menard & Redko on the Role of Canadian Private Law in the Control of Risks Associated with Tobacco Smoking
Professors Lara Khoury and Marie-Eve Couture-Ménard (McGill), and Olga Redko (LL.B./B.C.L. Candidate, McGill) have posted to SSRN their article, The Role of Private Law in the Control of Risks Associated with Tobacco Smoking: The Canadian Experience, 39 Am. J. L., Med. & Ethics 442 (2013). Here's the abstract:
Can private law litigation serve as a tool for advancing public health objectives? With this contentious and oft-asked question in mind, this text tackles Canada’s recent tobacco litigation. This Article first presents critical commentary regarding various lawsuits waged against Canadian cigarette manufacturers by citizens acting as individuals or as parties to class action lawsuits. We then turn to analyze how Canada’s provincial governments rely on targeted legislation to facilitate private law recourses for recouping the healthcare costs of treating tobacco-related diseases. The authors address challenges to the constitutionality of this type of legislation, as well as attempts by manufacturers to transfer responsibility to the federal government.
Sunday, July 14, 2013
Professor Paul McMahon (Harvard) has posted to SSRN his article, Proceduralism, Civil Justice, and American Legal Thought, 34 U. Pa. J. Int'l L. (forthcoming). Here's the abstract:
American legal scholars spend a large proportion of their time debating and theorizing procedure. This Article focuses on American proceduralism in the particular field of civil justice and undertakes a detailed comparison with England, where procedural questions receive little academic attention. It finds that procedure is more prominent in America partly because Americans have been more willing than others to use private litigation as a tool for regulation. More significantly, procedural questions necessarily occupy more space in American debates because authority over civil justice is unusually dispersed among different actors; procedural rules allocate power among these actors. But American proceduralism runs deeper than these surface explanations allow, and a full account requires an examination of the history of American legal thought. I trace contemporary American proceduralism to a counter-intuitive source: the emergence of Legal Realism in the 1920s and 1930s.
Friday, March 29, 2013
Zachary Savage (J.D. Candidate, NYU), has posted to SSRN his student note, Scaling Up: Implementing Issue Preclusion in Mass Tort Litigation Through Bellwether Trials, N.Y.U. L. Rev. (forthcoming 2013). Here's the abstract:
The civil litigation system aims to resolve disputes in an efficient, centralized, and final manner. In the context of mass tort litigation, one technique courts often use to achieve these goals is what I call “scaling up”: holding individual trials, and then applying results from these trials to similarly situated individuals. Scaling up, however, presents two difficulties. First, the technique risks compromising defendants’ Due Process rights by creating impermissible settlement pressure. Second, scaling up requires the initial court to structure the litigation so that it may serve as a template for follow-on proceedings; where this is not done, attempting to graft the results of one proceeding onto the remaining group of similarly situated individuals may simply lead to more protracted litigation.
Yet these difficulties are not inherent to the technique; in fact, courts can scale up in a way that avoids these problems. In order to mitigate the Due Process problem, courts should not apply the results of individual trials to subsequent trials involving similar claims until a substantial number of trials have been completed, and until it has become clear that any verdicts unfavorable to defendants are not flukes or outliers. And to ensure that scaling up does not simply lead to more protracted litigation, the initial trials should be structured so as to maximize the likelihood that individuals in follow-on litigation can invoke the findings under the issue preclusion doctrine of Parklane Hosiery v. Shore. The American Law Institute has made a proposal with these considerations in mind with respect to issue classes. This Note argues that a similar approach should be taken in the Multidistrict Litigation (MDL) process, where most mass tort litigation occurs today. This approach would be particularly useful if applied to one device that is being used with increasing frequency in the MDL process: the bellwether trial.
Friday, March 22, 2013
At Corporate Counsel, there's an interesting piece by journalist Michael Goldhaber entitled Kindergarten Lessons from Chevron in Ecuador. Goldhaber, who has been following this massive and messy litigation for years, offers what he sees as some of the true and false lessons from the ongoing litigation concerning Texaco-Chevron's involvement in oil drilling in Ecuador.
In a nutshell, the litigation involves claims that a Texaco subsidiary caused environmental damage to the Oriente region of Ecuador. Plaintiffs originally sued in the Southern District of New York, but their suit was dismissed on grounds of forum non conveniens. Plaintiffs then filed a lawsuit in Ecuador and won an $18 billion judgment. Chevron contends that the Ecuadorian judgment was obtained by fraud and corruption, and has resisted enforcement of the judgment. Chevron sued plaintiffs' attorney Stephen Donziger and others, asserting RICO and fraud claims. An international arbitration tribunal weighed in pursuant to the Ecuador-US bilateral investment treaty. Plaintiffs are seeking to enforce the judgment in Canada, Argentina, Brazil and elsewhere. This mess of a litigation has been going on for nearly 20 years.
Goldhaber, in prior work, has articulated a strong view that the Ecuadorian judgment was the product of fraud and corruption. In the new article, Goldhaber takes as his starting point the Stanford Journal of Complex Litigation symposium that took place in February. He goes through the basic lessons offered by the participants -- plaintiffs' lawyer Graham Erion, defense lawyer Theodore Boutros, and a host of scholars including myself.
The strongest lesson (and here I am in complete agreement with Goldhaber): "Be careful what you wish for." The irony of this litigation is overwhelming. Texaco fought to have the case dismissed on grounds of forum non conveniens, arguing that Ecuador was a more appropriate forum. The plaintiffs argued that the Ecuadorian courts could not handle the case and that it should remain in the U.S. Ever since the massive judgment, however, the positions have been flipped -- with the plaintiffs insisting that the judgment deserves respect and the defendant contending that the Ecuadorian courts were corrupt. Goldhaber has referred to this as "forum shopper's remorse."
But I do not agree with Goldhaber's next step. Noting that "the abuse of transnational litigation would never have happened had the U.S. held on to the case," he suggests that the doctrine of forum non conveniens be altered to take into account the stakes and political significance of a case:
The great blunder in this dispute was to ship it to Ecuador in the name of forum non conveniens. The U.S. courts could have saved everyone a lot of grief had they recognized that a case is more prone to abuse when the issues are (a) high-stakes or (b) politicized. I learned from Russia's Yukos affair that, even if a weak judicial system has made significant progress, it does not deserve trust in a hot-button case of great magnitude. It was reckless to expect Ecuador (even if it had just adopted a new set of corruption reforms) to handle a huge case pitting gringo oil companies against indigenous rights. My modest suggestion is to incorporate these factors into the FNC analysis.
The adequate alternative forum prong of the forum non conveniens analysis is a low threshold, and deliberately so. A lawsuit alleging environmental harm to Ecuadorian land and medical harm to Ecuadorian citizens, and involving control over Ecuadorian natural resources, belongs in Ecuador. That is the very point of forum non conveniens. A U.S. court should be loath to say that it will hear the case in the U.S. because it thinks the Ecuadorian courts just cannot handle it. A judgment obtained by fraud should not be enforceable elsewhere, but this is better addressed ex post, which is exactly what the current litigation -- albeit in a rather ugly fashion -- is doing. But to have said, ex ante, that the case should be heard in the United States despite all of the public and private interest factors that pointed to Ecuador, would have been a mistake.
Wednesday, March 20, 2013
Widener University School of Law and the Widener Law Journal are presenting a day-long symposium, Perspectives on Mass Tort Litigation, on Tuesday, April 16, 2013 in Harrisburg, Pennsylvania. The Honorable Eduardo Robreno of the Eastern District of Pennsylvania will present a luncheon address, Federal Asbestos Litigation: Black Hole or New Paradigm? Other participants include Hon. Thurbert Baker (McKenna Long); Mark Behrens (Shook Hardy); John Beisner (Skadden); S. Todd Brown (SUNY Buffalo); Scott Cooper (Schmidt Kramer); Amaris Elliot-Engel (Legal Intelligencer); Michael Green (Wake Forest); Deborah Hensler (Stanford); Mary Kate Kearney (Widener); Randy Lee (Widener); Bruce Mattock (Goldberg Persky); Tobias Millrood (Pogust Braslow); Linda Mullenix (Texas); Christopher Robinette (Widener); Susan Raeker-Jordan (Widener); Sheila Scheuerman (Charleston); Victor Schwartz (Shook Hardy); William Shelley (Gordon & Rees); Aaron Twerski (Brooklyn); Nicholas Vari (K&L Gates); and Nancy Winkler (Eisenberg Rothweiler). I will also participate via Skype videoconference. Here's the brochure: Download Widener 2013 MTL Symposiu Brochure
Tuesday, March 19, 2013
In an opinion by Justice Breyer, the Court unanimously rejected a stipulation by a proposed class representative to limit recovery for the putative class to less than $5 million, in an apparent attempt by plaintiffs to avoid removal to federal court unde the Class Action Fairness Act. See also SCOTUSblog.
Monday, January 21, 2013
Corporate Counsel has a short piece, Crafting a Defense in Food-Labeling Class Actions, by O'Melveny's Kelsey Larson and Carlos Lazatin.
Skadden has issued a useful analysis of upcoming cases to watch and potential developments for 2013 in class actions and product liability. The analysis includes contributes by Skadden's John Beisner, J. Russell Jackson, and Jessica Miller.
Friday, November 30, 2012
On November 26 the Supreme Court denied cert in RJ Reynold Tobacco Co. v. Clay, an appeal from a Florida state court decision to give the Engle court ruling preclusion effect.
Engle, recall, is the tobacco issue class action certified and upheld by the Florida Supreme Court. Does the denial of cert pave the way for issues class actions to flourish (at least for the moment) or is this just not the right vehicle?
See Scotusblog for a summary and links. ADL
Saturday, October 20, 2012
The conference will take place on October 24, 2012 in Washington, D.C., and includes panels on third-party litigation financing and global litigation (including the Chevron Ecuadoran litigation and the adoption of class actions in other countries).